U.S. stock futures turned negative as European markets fell and investors steered clear of banking stocks.
Dow futures dipped 64 points, or 0.5 per cent, to 11,781 about two hours before the New York Stock Exchange opened for business. S&P futures edged 9.2 points, or 0.8 per cent lower. Both had risen earlier in the morning.
European stocks marked heavier losses, with Britain's FTSE 100 down 2.1 per cent, France's CAC 40 losing 1.6 per cent and Germany's DAX slipping 1.4 per cent.
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Banks were among the hardest-hit after Fitch said a day earlier that the risk of contagion to U.S. banks from Europe's debt crisis was serious and Moody's downgraded 12 German public sector banks seen as less likely to receive federal government support, if needed.
Investors were also unnerved by sharply higher yields on Spanish and French bonds, indicating concerns over credit quality.
Spain paid nearly 7 per cent to raise 3.56-billion euros in 10-year bonds, the highest rate since 1997 and a level seen as unsustainable over the long term. After the auction, yields shot up to 6.78 per cent on the secondary market.
Italian and French yields also rose as investor fled to German bonds. The Germany-France spread was 196.6 basis points. Safe-haven Bund futures rose 53 ticks.
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Italy's new prime minister Mario Monti faced violent protests in Milan as he prepared to unveil his government's anti-crisis strategy in parliament.
Benchmark crude for December delivery lingered above $100 (U.S.) a barrel at $101.01 in electronic trading on the New York Mercantile Exchange.
Gold fell $26.20 to $1,748.10 an ounce.
The euro weakened to $1.3459. The Canadian dollar traded 97.30 U.S. cents.